Let’s Make Deal on a Transportation Bill

Democrats and liberal op-ed writers are busy beating up Republicans for refusing to do what Republicans are supposed to always do, shut and vote for higher taxes to fund roads, bridges and public transit.

Republicans should agree on some revenue enhancements when Democrats are ready to make two key concessions. First, Democrats will agree to unlink highway funding from transit funding. The issues need separate priority and have many differences when it comes to the best way to fund them and at what level they should be funded. Second, Democrats will stop opposing the elimination of prevailing wage requirements.

Simply having Republicans hold their noses and vote for revenue enhancements for transportation will not serve the Commonwealth’s long term best interests. Savings opportunities will have been foregone and needed structural changes will not be enacted.

There is a reason Pennsylvania is now facing a multiplicity of serious financial problems. The state government-for too long-has kicked cans down the road as it kowtows to the power and influence of unions. Teachers, transit workers and other government workers have had their way with legislation regarding strikes, prevailing wages, pensions, layoff rules, and so on for decades. Every problem is met with demands for more money to feed the monster that has been created. Especially noteworthy are the Port Authority of Allegheny County as well the largest school districts in the state.

Previous governors have redirected highway funds to keep the Port Authority from going on strike robbing Southwest Pennsylvania of dollars needed to keep roads and bridges maintained. Why do the complainers about Republican inaction not want to hear about that abuse of power? Then too, tens of millions of Federal highway funds were redirected to the North Shore Connector in Pittsburgh. Where was the outrage over that? Likewise, almost a hundred million in state and local tax dollars were required to build the Connector. That’s a lot of road and bridge work. But as always the supporters of public transit were 100 percent behind building the tunnel regardless of costs: one that provides free rides to users.

The mindlessness encapsulated by this venture is the single greatest argument for Republicans to demand some concessions from Democrat and transit supporters before folding and voting for the higher revenue status quo fans want.

County Park Fee Examination

Of the $23 million in total revenues for the Allegheny County Parks Department in 2013, $18.4 million (80%) came from the Regional Asset District additional sales tax, and the remaining $4.6 million came from various fees on activities at the nine parks. The biggest chunk was represented by golf fees ($1.79 million), followed by swimming pool fees ($0.985 million) and park shelter and stable rents ($0.649 million).

The County Council is currently considering taking a hard look at these and other fees as a way to raise new monies (one estimate puts the goal at an additional $700,000) and one Council member noted that the goal is to "set a policy where there is no such thing as free". The County commissioned a study in 2007 on the park system which said this about fees countywide: "reassess all existing fees and charges and establish new schedule of fees that reflect both the market value and cost of providing the facility and/or program". The clear message of that recommendation is that there should be a close and recurring look at the fees the County charges to help maintain the 9,000 acre park system and its amenities. Of course, boosting fees may cause some users and prospective patrons to explore other alternatives for recreational activities.

The responsibility of parks lies with the actual parks department ($8 million in expenditures), facilities management, which was broken off from Public Works and from budget narratives assumed the responsibility for parks maintenance (a share of a total of $21 million in expenditures) and the parks division of the County police ($5 million in expenditures). If the Councilman’s statement that he wants the park system overall to be more "revenue neutral" is taken to mean he wants it to be a breakeven operation, then the maintenance costs must be greater than $10 million a year based on the revenue of $23 million and the stated parks and police expenditures.

Governor Taking Heat over Transportation Funding

And the cries for the Governor to find new revenue to fix roads and bridges -and fund mass transit -grow louder. This while the Governor wants to protect taxpayers from higher costs. He knows other problems are looming large such as the whopping increases in pension funding that will be required over the next few years. Where will that money come from? There are projected Federal Medicaid funding cuts. How will that be made up?

It is marvelous to watch the crowd that supports an outrageously expensive and inefficient mass transit system and wants the state to pour more money into it grouse about transportation needs. Indeed, the Governor, against his own better judgment and the strong case that was made not to bail out the Port Authority, has committed $35 million a year in additional state tax dollars for the Authority. No one knows where that money is coming from.

What is really galling about the latest round of caterwauling regarding the Governor’s inaction on raising taxes and fees for transportation is the assent given explicitly or tacitly by the same complainers when the previous Governor was moving hundreds of millions in highway funds to underwrite the Port Authority’s egregious spending. That money was wasted rather than fixing road problems.

Moreover, why was it that the people who are now so exercised about the Governor’s inaction could not contain themselves at the prospect of tolling I-80 to raise funds for transit? Anyone who bothered to look at the law could have known that tolling I-80 for any purpose other than funding maintenance and improvements on I-80 was not going to happen. Yet the then Governor, the Legislature and all the spendthrift supporters of mass transit all thought it was great idea and that somehow the presidential administration would get it approved notwithstanding the law. Mirabile dictu, it did not cave to political pressures from the former Governor. Years were wasted in dealing with cost issues and seeking funding sources. And then the sharp economic downturn put on hold any meaningful discussions.

Road work does need to get done. How about we ask the Feds to lift the Davis-Bacon prevailing wage requirements? That would lower costs dramatically. Not that it will ever happen. But the state could eliminate prevailing wage requirements on projects not using Federal dollars. Where is the clamoring for something sensible like that? Why is it always the taxpayers who must make the sacrifices? Why not some concessions from those who drive the costs far above where they would be in market based system?

Buses, and Trains, and Trucks, Oh My!

The Governor’s transportation panel met in Harrisburg on Monday to hear presentations on mass transit, rail, and truck modes and discuss funding options for what is pegged at $10.7 billion of "unmet needs" in the state’s infrastructure. With three separate modes to receive testimony upon, there is a lot of information for the panel to digest as it works toward issuing recommendations by August.

Here are some of the interesting factoids taken from the presentations:

Transit-When considering the funding for the state’s transit agencies, Federal and state subsidies provide 50% of SEPTA’s budget with local funding and fare revenue providing the remaining 50%. All other systems derive much more funding from Federal/state sources with PAT at 65%, other urban systems (in total) at 70%, and rural carriers at 80%. PAT accounted for 15% of the 432 million boardings in FY 09-10. The highest base fare for transit-levied by five systems-is $2.

Trucking-Roughly 1.2 million tons of freight are moved each day in PA. The industry in PA pays $1.39 billion in state and Federal taxes and fees annually. Truck-related fatalities per 100 miles driven fell in recent years.

Rail-Some $40 million from the capital budget and the rail funding assistance program is dispensed in Pennsylvania.

How to fund the state’s transportation needs? That question was given a 16 page treatment looking at existing sources, new sources, short-term, long-term, etc. Everything from increasing registration fees, tire fees, rental and lease fees and taxes were mentioned, along with dedicating certain sources of revenue to specific uses (like driver license fees to the state police or small games of chance for transportation) along with new forms of local taxation for transportation needs (sales tax, income tax, etc.). Many of the funding options were raised by the previous Governor’s transportation panel in 2006.

Capital City Crisis

Could a decision to guarantee an authority’s debt on an incinerator turn Harrisburg’s finances to ashes? It seems to be the case as the state’s capital (population 47k) is in such a pickle that elected officials including the city’s controllerare suggesting Harrisburg needs to "…decide which way to go, in bankruptcy or Act 47". Much hinges on debt service payments that the City agreed to make for a waste-to-energy incinerator owned by a separate authority.

The Mayor stated that finances are so bad that they "might not be able to meet payroll this month". Tax increases, asset sales, and an exploration of takeover remedies are on the table.

At least it does not appear that pension costs are what plague the city, at least not yet. Harrisburg showed a very healthy fund ratio in 2007 with more than enough assets to meet its liabilities (118% funded).

As our 2009 report on Chapter 9 bankruptcy pointed out, the U.S. Constitution allows Congress to write uniform bankruptcy laws and municipalities are permitted to file for bankruptcy protection (debt adjustment may be more appropriate). In order to preserve the Federal-state balance of power, states are free to prohibit their municipalities from filing and those that do can place as many restrictions on filing as they wish. In Pennsylvania authorities cannot file for bankruptcy and the only statutory language on municipal filings flow through Act 47. Thus, a municipality would have to be in Act 47 status and meet certain criteria in the Act 47 statute to proceed to bankruptcy. No community in Act 47 has yet to file for Chapter 9 bankruptcy.

Maybe communities that are faced with a sudden catastrophe of an economic kind ought to have a quicker route to Chapter 9 than first entering into Act 47. Consider that Harrisburg is in a really bad spot: the Act 47 process has to play out, then a recovery plan has to be written, and then one of the criteria related to a Federal filing has to be satisfied. There may be some cases that require swifter action.

Lingering Problems at Pittsburgh International

The Allegheny County Airport Authority has released its budget for 2010.  And while it contains a very slight increase in expenditures over this year’s budget it has been necessary to boost airline charges to cover expenditures and to reverse a decline in revenues. These higher costs will ultimately be passed along to passengers or lead to lower profits for the airlines.

Continue reading